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Health care legislation brings new tax provisions

In the past couple of weeks, Congress passed and the President signed into law significant legislation that will reform America’s health care system.

While the Department of Health and Human Services is the government agency in charge of the health care policy aspects of the legislation, the IRS is charged with administering the various changes in the tax law that were included.

I write today to give you a sense of what these changes entail for the IRS as a whole, and try to answer some of the initial questions that I have received from employees.

At the highest level, the legislation includes these major roles for the IRS:

* Delivering tax credits to businesses and individuals to help cover the cost of health coverage
* Administering a requirement that individuals who are deemed able to afford health coverage purchase it, or pay an additional amount with their tax return
* Administering various tax provisions designed to raise revenues: some that relate directly to health care, others that don’t

Implementation planning is in full swing and in the coming weeks and months you will be hearing more. A very important thing to realize about this bill is that the tax provisions come into effect gradually over many years.

This year, we’ll be very focused on delivering a tax credit that is available to small businesses and non-profit employers who provide health coverage for their employees.

But most of the broad-based provisions that affect individuals’ tax return filings don’t take effect for a number of years.

And finally, I recognize that emotions have run high around health care, and that the IRS is at times invoked as part of a broader political conversation. Please be assured that nothing in this legislation fundamentally alters the relationship that the IRS has with taxpayers, nor does it change our commitment to both outstanding taxpayer service and fair, effective compliance programs.

I continue to be incredibly proud of our ability to answer the call when we are asked to implement important programs for the country. I am confident that we will continue to honor this tradition of excellence. Thanks again to each of you for your dedication to the Service and to the nation’s taxpayers.

--Doug Shulman

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